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Thursday, April 9, 2009

Shares of Genworth Financial (NYSE: GNW) tumbled in extended trading on Thursday after the Richmond, Virginia based life and mortgage insurer said that it has failed to qualify for new capital under the Treasury Department's Troubled Asset Relief Program.

Genworth said in a statement that it was informed by the U.S. Department of the Treasury that the deadline it set for approval by the Office of Thrift Supervision of Genworth's application to become a savings and loan holding company passed before OTS completed its review of Genworth's application and Treasury would not extend the deadline. As a result, the company said it wouldn't acquire InterBank of Maple Grove.

Chief Executive Michael Fraizer said in in a statement that Genworth would pursue "strategic opportunities ranging from selected asset sales to other governmental programs that could provide additional financial flexibility."

Meanwhile Office of Thrift Supervision spokesman Bill Ruberry said: "Genworth applied and the OTS has been reviewing the application. That's our only comment."

Last week, Moody’s Investors Service lowered its insurance financial-strength ratings on Genworth Financial Inc., giving the company and its life insurance subsidiaries a negative outlook.The rating agency said that the company stands to face "longer term challenges in balancing operating company capitalization with repaying longer term debt maturities, assuming that no attractive refinancing is available." Moody's said further that Genworth's "profitability and capital generation will remain under pressure because of investment losses over the near to medium term," it said.

Early in February, Genworth Financial, Inc. (NYSE: GNW) reported that it swung to fourth quarter operatingloss of $321 million, or $0.74 per diluted share, compared with profit of $180 million, or $0.41 per diluted share, in the same quarter of 2007. Loss from continuing operations for the full year of 2008 was $572 million, or $1.32 per diluted share, compared to income of $1,154 million, or $2.58 per diluted share, for the full year of 2007. The insurer has been unprofitable for three straight quarters.

Life insurers have been hit hard by mounting losses in their investment portfolio amid turmoil in financial markets.

Shares of life insurers, including Genworth earlier rallied after U.S. Treasury Department extended the Troubled Asset Relief Program to certain life insurers.

Genworth stocks plunged over 16% in after hours trading. Shares of the company were up 18% in regular trade on Thursday.